FA Alpha Weekly Digest - 05 08 2023

Wall Street’s stock picks can’t be trusted and the advertising bias of the mainstream financial media makes their news only sensationalist-driven. Gain an edge by knowing the trends that matter and some of the mispriced names in the market.

We bring you the FA Alpha Weekly Digest, a roundup of FA Alpha’s unique and unparalleled equity, credit, and macroeconomic insights over the past week.

In today’s digest, we’ll take a look at the secform4.com website, HF Sinclair (DINO), Regeneron Pharmaceuticals (REGN), Fidelity National Information Services (FIS), and iShares Self-Driving EV and Tech ETF.

Insider Trading Reveals Recent Trends May Not Be Short-Lived

Secform4.com provides an analysis of the ratio of daily buy and sell filings from public Form 4 data. Generally, management teams tend to buy stock when it is cheap and sell when it is expensive. However, when management buys even when stocks are soaring, it signals an opportunity, and when they are not interested in buying shares on the cheap, it is a warning sign. In early 2020, the S&P 500 sank and insider buying skyrocketed. The ratio fell to near its lowest level in mid-March, but it quickly rose when Silvergate Capital (SI), Silicon Valley Bank,and Signature Bank (SBNY) collapsed, taking the market with it. Despite this, the overall trend is falling, and management teams see mounting headwinds, indicating more volatility for the next few months.

This refiner now brings gas all the way to your car

HollyFrontier, formerly a refining and pipeline business, acquired the Sinclair oil business in March 2022. The acquisition turned its business into a retail marketing business with Sinclair-branded gas stations and convenience stores. This integration gives the company control over the whole supply chain. Despite risks with new growth plans, the convenience store and gas station business is a stable business, and HF Sinclair already reached a massive 24% ROA in 2021. However, the market continues to overlook this, missing a good investment opportunity.

This biotech company is the new victim of rating agencies

Regeneron Pharmaceuticals is a successful biotech company with several blockbuster drugs in its portfolio, such as Eylea and Dupixent. The company heavily uses genetically engineered mice in its R&D processes, which has helped it stand out from its competitors. Regeneron has consistently had a Uniform ROA of over 20% in the last decade. However, the company is being rated as barely investment-grade, due to industry generalization and bias, which assumes that all biotech companies are risky, even if they are profitable.

This payments services company clears the books to focus on the bright future

During the pandemic, companies faced disruptions in their supply chains, failed acquisitions, and falling demand. "The big bath" is a strategy that involves writing? off everything a company? can to clean up its financial statements. Fidelity National Information Services, a payment processing solutions company, is currently an example of this strategy. They made large acquisitions in the payment space, looking to be involved in point-of-sale business acquisitions. Due to the increase in global payment volume, Fidelity's profitability surged, with Uniform return on assets jumping from 38% in 2015 to 61% in 2022.

This ETF provides a unique opportunity to invest in the future of transportation

The race for dominance in the electric vehicle industry also extends to self-driving technology. Tesla is considered a leader in this technology with its advanced autopilot system. However, other companies like Mercedes are also making significant strides in autonomous driving, with their Level 3 technology surpassing Tesla’s Level 2 system. Self-driving cars have the potential to be disruptive and transformative in the transportation industry. Companies that can deliver safe and reliable self-driving vehicles are likely to have a significant advantage. For investors, diversifying investments to a group of companies that work in this space could be a good way to be exposed to this technology.

We hope you find this week’s FA Alpha Daily articles insightful.

See you next week as we talk about another set of interesting names.

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